Quote:
Originally Posted by John F
In the U.S. ...
I thought with the settlement, for the next couple of years, retailers could discount "agency" books, they just can't have an overall loss for a particular publisher.
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They can discount BPH titles if they choose to because there can be no agency agreements for a few years.
But discounting does not equal selling below cost. Two separate things...
In the wholesale model the publisher sets a list price and negotiates a retailer cost, usually equal to 50-60% of list. The retailer then sets the consumer price at whatever markup they choose and the difference between their price and the list price is the discount. So, if Kobo gets a book at 50% of list, they could discount it 45% and still be making a profit. More importantly, they could adjust prices at will so they can put it on sale for a day or two, maybe in a themed deal focused on sparkly vampire books or baseball books during spring training, etc.
In other words, they do more than list books and hope somebody buys them. It does, however, require the retailer to actually know how to retail.
One of the most powerful discount mechanisms I've ever seen was Fictionwise's micropay rebates; you bought a book and got a variable rebate credit good for your *next* purchase. So buying books from them incentivized you to return and buy more from them. Agency killed that along with other clever marketing tactics, all in the service of making consumers pay more.